SEC's Five-Year Innovation Exemption Puts Tokenised Equities Ahead of Congress

On 17 September, the US Securities and Exchange Commission (SEC) introduced a temporary conditional framework, labelled an “Innovation Exemption,” permitting qualified venues to trade certain tokenised US-listed stocks without full SEC registration. Automated market makers and liquidity pools are allowed under the exemption, which runs for five years and imposes investor-protection guardrails including permissioned participants, volume limits, smart-contract auditability requirements on public blockchains, and trading halts that mirror those on the underlying securities. Andrew Cuomo, former New York Governor and a board member of OKX, writes that the exemption marks the point at which tokenisation shifted from a speculative future to a live question of market structure.

Cuomo, who also serves as co-chair of a joint venture between Intercontinental Exchange (parent of the New York Stock Exchange) and OKX focused on tokenised and digitally native financial infrastructure, frames the SEC action as regulatory experimentation rather than permanent architecture. SEC Chairman Paul Atkins has publicly described it as a “bridge toward durable rulemaking,” a characterisation that itself signals the framework’s transitional nature. Tokenised shares traded under the exemption must carry the same rights and privileges as their traditional equivalents, and issuers retain the ability to object when unaffiliated third parties tokenise their shares.

The exemption arrived two days after Congress stumbled: on 15 September, the Senate failed to advance the Digital Asset Market Clarity Act, with the cloture motion falling short of the three-fifths threshold at 49 votes. That sequencing matters. The regulator moved while the legislature stalled, deepening the gap between operational market reality and statutory clarity. Cuomo draws an explicit parallel to the pre-crisis period he observed as New York attorney general, arguing that the 2008 lesson was not to halt financial innovation but to ensure oversight and innovation develop in tandem. Whether the SEC’s laboratory approach can hold that balance through a five-year experiment, without a statutory foundation beneath it, is the question operators now have to price.